H.R. 7671 — Students and Young Consumers Empowerment Act

This section replaces the Private Education Loan Ombudsman—previously designated within the Consumer Financial Protection Bureau (CFPB) to assist private education loan borrowers—with the Assistant Director and Student Loan Borrower Advocate (Student Loan Borrower Advocate), appointed by the CFPB Director to head the new Office for Students and Young Consumers. The Student Loan Borrower Advocate must (1) enter a memorandum of understanding within 60 days of enactment (from 90 days) with the Secretary of Education, the Federal Student Aid Chief Operating Officer, and the Department of Education Student Loan Ombudsman to coordinate complaint resolution for both private education loans and Federal student loans and to authorize CFPB access to relevant Department of Education data systems; (2) accept and attempt to resolve complaints from such borrowers, including against lenders, servicers, and debt collectors; and (3) perform other duties as directed. This section further requires the CFPB Director to notify congressional committees if the position is vacant for 60 or more days or if the memorandum lapses for 60 or more days; directs the Student Loan Borrower Advocate to issue three annual reports analyzing (1) the student loan marketplace (including risks and recommendations), (2) campus banking arrangements and financial products used by higher education students, and (3) risks to young consumers; and authorizes the Advocate to gather market data and recommend that the Director require reports from covered persons and service providers. (Thus, the office expands CFPB oversight and borrower assistance from private education loans to Federal student loans and young consumer financial products.)

This section requires the Secretary of Education, the Chief Operating Officer of Federal Student Aid, and the Student Loan Ombudsman to enter into a memorandum of understanding with the Assistant Director and Student Loan Borrower Advocate of the Bureau of Consumer Financial Protection within 60 days of enactment. The memorandum must (1) ensure coordination in providing assistance to borrowers seeking to resolve complaints related to private education loans or loans made, insured, or guaranteed under title IV of the Higher Education Act of 1965, and (2) authorize Bureau access to all relevant Department of Education information systems, records, and data, including those maintained by contractors.

This section establishes definitions for 14 terms used in this title, including (1) agency (i.e., the Bureau of Consumer Financial Protection or Department of Education, as applicable); (2) Bureau (i.e., the Bureau of Consumer Financial Protection); (3) complaint (i.e., a comment, inquiry, or request for assistance from a student loan borrower); (4) Department (i.e., the Department of Education); (5) Assistant Director (i.e., the Assistant Director and Student Loan Borrower Advocate of the Bureau); (6) Federal consumer financial law; (7) institution of higher education; (8) nonpublic information; (9) private education loan; (10) provider; (11) receiver; (12) Secretary (i.e., the Secretary of Education); (13) student financial services (i.e., consumer financial products or services related to students of institutions of higher education, including student loan origination and servicing); and (14) title IV loans (i.e., loans made, insured, or guaranteed under title IV of the Higher Education Act of 1965).

This section establishes cooperation between the Assistant Director of the Consumer Financial Protection Bureau (CFPB) and the Secretary of Education on supervision and oversight of student financial services, including (1) points of contact, sharing of examination and review schedules, coordination of activities, quarterly meetings on complaints and borrower characteristics, and alignment of reporting categories; and (2) information sharing protocols, including CFPB access to Department databases and consumer complaints (with mutual transfer of student loan borrower complaints and 10-day referral for complaints on title IV loan origination, disbursement, or servicing or on private education loans), a process for defaulted title IV loan complaints, amendments to IRC §6103(l)(13)(D) and 5 USC §552a(b) to authorize certain disclosures and redisclosures, and other information as appropriate. The section further requires a memorandum of understanding on data privacy and safeguards for nonpublic information and directs the CFPB to accept and process complaints related to private education loans and title IV loan servicing in accordance with existing consumer complaint procedures (12 USC 5534). (Title IV loans are federal student loans administered under the Higher Education Act.)